The 70% Rule of House Flipping

How it works:

1. Estimate ARV: Determine the property's potential market value after renovations are complete.
2. Calculate the 70%: Multiply the ARV by 0.70 (70%).
3. Subtract Repairs: Take that result and subtract your estimated cost for all repairs and renovations.
4. Get Your Max Offer: The final number is the maximum price you should offer for the property. 

Example:

• ARV: $300,000
• Repair Costs: $50,000
• Calculation: ($300,000 x 0.70) - $50,000 = $160,000.
• Max Offer: You should aim to pay no more than $160,000 to stay within the rule.

Why it's used:

• Profit Buffer: It accounts for profit, selling costs, holding costs, and unexpected expenses.
• Risk Management: Helps beginners avoid costly mistakes in bidding on flips.
• Quick Analysis: Provides a fast way to filter potential deals. 
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• Important considerations:
• Not absolute: It's a guideline, not a rigid law; market conditions and deal specifics can vary.
• Accurate Estimates: Overestimating ARV or underestimating repairs can break the rule.
• Professional Help: Consider professional inspections to get accurate repair and ARV numbers.